SINGAPORE, April 26 (Reuters) - Siam Commercial Bank (SCB) , Thailand's No. 3 lender, is close to hiring Morgan Stanley to advise on a potential sale of a significant stake in its life insurance unit, people familiar with the matter said.

A second investment bank is also likely to be brought in when the sale process kicks off, the people said, speaking on condition of anonymity as the information was not public.

Some bankers and analysts say that the entire SCB business - SCB Life Assurance Public Co - could fetch around $2 billion, based on a multiple of 2-2.5 times its embedded value of more than 30.42 billion baht ($865 million) at the end of 2013. Embedded value, a widely used measure in the insurance industry, values companies based on future earnings from current policies.

SCB is seeking a partner for its insurance business in a move to accelerate growth in the business. It was not immediately clear how much of the business SCB will sell, nor what it planned to do with the proceeds.

Previous discussions on a possible sale have centred around a divestment of at least 25 percent. (http://reut.rs/1rbuIYN).

The deal would also involve a bank distribution agreement, allowing the new partner to sell insurance products through SCB's branch network.